Summary
Questions: Why are so few Employee Stock Ownership Plans (ESOPs) created? Why do business owners who proactively explore an ESOP sale but decide not to proceed make that choice? What do such sellers see as the key barriers? What information informs their decision? What are their primary transaction objectives? What alternatives do they opt to pursue instead of an ESOP?
Summary: This brief reports on in-depth interviews with eight sellers who considered an ESOP but chose not to proceed. The brief describes their transaction objectives, the key barriers they identify, their information sources, and the alternatives they pursue instead.
Among the barriers named, the desire for more cash up front, cost, complexity, and the absence of internal succession leadership were common. Smaller companies were more likely to express concerns about regulatory compliance.
These interviews generated preliminary exploratory answers to inform future research.